Public spending and university quality: is there a link?

Public spending and university quality: is there a link?

by Martin Juno

Broadly speaking, higher education systems range from those relaying almost entirely on public funding to those mainly supported by private sources. Of course, there are a variety of options between those extreme points and most countries try mixed schemes.

Which system provides the better outcomes in terms of university teaching and research quality?

An interesting exercise that may provide a general answer to this question is to compare the relative performance of institutions operating in different funding environments. In order to conduct this analysis we used the higher education finance indicators provided by UNESCO (available here) , establishing four range groups (or quartiles) of public spending on tertiary education as a proportion of Gross Domestic Product (GDP) of the countries . Then the top 400 QS World University Rankings (QSWUR) institutions – available on topuniversities.com- were distributed among each spending level quartile and the average scores for every group were calculated.

Excluded countries: data not available for Saudi Arabia, Taiwan and China.Sources: UNESCO Institute for Statistics (2000-2010)

Although this analysis is obviously limited -and arguably more complex research is required in order to arrive to conclusive remarks- the exercise provides interesting results.

The first finding is that university quality is not necessarily correlated with the proportion of public funding sources . Actually, overall QSWUR average scores are similar for universities coming from different higher education finance models. For instance, institutions from countries with the lowest GDP proportion of public spending on higher education (quartile 1) have an average score of 51.6, while those from the highest level of expenditure (quartile 4) obtain 51.5 points. Nevertheless, among the group of countries that have an intermediate level of public funding as percentage of GDP, average university scores are clearly better for those showing a higher government involvement (quartile 3).

In terms of Academic Reputation, the first and the third quartile are the best performers, scoring 56.3 and 57.3, respectively. However, at the same time the first quartile gets the weakest score in citations per faculty. This indicates that although institutions from countries with low public spending on tertiary education may have good quality research outputs, they struggle to expand and/or circulate their activities due to financial restrictions.

With regard to Employer Reputation, the results clearly benefit institutions from countries with relative lower public spending on higher education, suggesting that those universities seem to be more aware of the market’s needs in terms of human resources skills and abilities.

The faculty/student ratio is another indicator where universities from countries with relatively low public spending on tertiary education perform better-off. In this case, institutions within the first quartile averaged a score of 58, ahead from universities in the third (53.7), fourth (54.5) and second quartiles (42.7).

Finally, the international indicators offer mixed results. Universities from countries with the highest rate of public spending on tertiary education are the best performers in International Faculty Ratio and International Students Ratio, reaching average scores of 58.6 and 57.8. These results are not surprising, given that most of these universities are based in highly developed countries (particularly from Northern Europe) that provide affordable or free higher education schemes.

In contrast, institutions in the third quartile get the lowest scores regarding international indicators (40.3 and 46.5), while those in the first and second quartile show a better performance.

On balance, it seems that overall university performance does not correlate to the share of government funding on tertiary education. However, the findings suggest that less public focused systems tend to be better in terms of provision of skills for the professional and working life. On the other hand, schemes that rely more on government funding offer a better environment for research production. Also, these latter systems seem to be more prone to attract international students and faculty staff.

As indicated before, this analysis is very limited and the findings are only a starting point to a broader discussion about how different funding schemes may affect the quality of university systems.